Bitcoin dipped for a fifth consecutive day Monday before regaining ground later in the day to trade near $23,000.
The largest cryptocurrency by market capitalization was recently down about a half a percentage point over the past 24 hours, according to data from CoinDesk.
“Bitcoin has had a few rough sessions but broadly speaking it still looks in good shape, sitting within the range it’s traded in over the last couple of weeks and not far from the new year highs,” Craig Erlam, senior market analyst at forex services firm Oanda, wrote in a Monday note.
Bitcoin (BTC) has risen about 40% in price this year amid surging investor confidence that inflation is waning without throwing the U.S. economy into recession. An unexpectedly strong employment report on Friday raised fresh concerns on both counts and sent crypto assets below $23,000 over the weekend after it breached $24,000 on a couple of occasions last week.
Traditional markets kicked off a new week lower as investors mulled the U.S. Federal Reserve’s response to the jobs data.
The S&P 500 index and the tech-heavy Nasdaq Composite closed down 0.6% and 1%, respectively, during the afternoon trading session. The Dow Jones Industrial Average (DJIA) was down 0.1%. The Federal Reserve raised interest rates by a quarter point last week after eight months of more hawkish half- and three-quarter-point hikes.
“Job numbers gave credence or credibility to the fact that the Fed couldn’t leave rates higher for longer and the markets have slowly started to respond to that,” Ben McMillan, chief investment officer of crypto asset manager IDX Digital Assets, told CoinDesk in an interview.
BTC’s current $20,000 threshold is a firm technical support, according to McMillan, although he said he wouldn’t be surprised to see BTC retest this critical mark.
“Crypto volatility is gonna persist this year, even if the uptrend is structurally bullish,” he said. “I think the key thing for investors now to keep an eye on is understanding bitcoin volatility and how to price it and size it in their portfolios.”
Investors are now scrutinizing Fed Chairman Jerome Powell’s annual sit-down with David Rubenstein at the Economic Club of Washington, D.C., on Tuesday, which could “shake things up a bit and is something the market is not pricing fully,” according to Singapore-based crypto options trading firm QCP Capital.
QCP Capital wrote on Telegram Monday that equities’ performance on Monday and after Powell’s speech on Tuesday will “guide our next leg in crypto.”
“If he [Powell] again defers to next week’s [consumer price index data], then we could be in for a nervous wait,” the firm added.
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